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Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship
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Webinar Deck: The Changing Face of IT Outsourcing in the Healthcare Payer Market: Don't Miss the Sailing Ship

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On June 5, Everest Group will host a one-hour webinar that will answer the following questions: What are the beneath-the-surface changes taking place in the payer IT industry? What are the trends and …

On June 5, Everest Group will host a one-hour webinar that will answer the following questions: What are the beneath-the-surface changes taking place in the payer IT industry? What are the trends and opportunities arising out of these changes? Why should CIOs start thinking of these transformational changes now? How should service providers assess their services portfolios and sales strategies from this transformational change perspective?

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  • 1. The Changing Face of IT Outsourcing in theHealthcare Payer Market: Dont Miss the Sailing ShipJune 5, 2013
  • 2. Proprietary & Confidential. © 2013, Everest Global, Inc. 2IntroductionsJimit AroraVice Presidentjimit.arora@everestgrp.comAbhishek SinghSenior Analystabhishek.singh@everestgrp.com
  • 3. Proprietary & Confidential. © 2013, Everest Global, Inc. 3Context settingSources for today’s webinarFocus of this webinar Present the current state analysis and future outlook of the healthcare payerindustry from a technology priorities and IT outsourcing perspective Discuss implications for healthcare payers and service providersTransactionIntelligenceHealthcare IT servicesresearch Summary insights fromhealthcare outsourcingresearch program Fact-based researchcovering healthcare ITservices Largest database ofoutsourcingtransactions+
  • 4. Proprietary & Confidential. © 2013, Everest Global, Inc. 4Presentation topicsChanging faceof ITO in thepayer industryAre serviceprovidersprepared toboard thissailing ship?Current stateof ITO in thehealthcareindustry Market size Growth Outsourcing activityWrap up andQ&A
  • 5. Proprietary & Confidential. © 2013, Everest Global, Inc. 525%24%14%9%7%7%5% 4%2% 3% 100%While the financial sector and the government contribute tohalf of the IT services market size, healthcare holds promiseof being the new growth engineGlobal IT services market size distribution by industry vertical2012; Percentage100% = US$530 billionBFSI1 Public Manufac-turingEnergy,Utilities, &ChemicalRetail,Distribu-tion, &CPG2Telecom Electronics& Hi-techMedia &Entertain-mentHealthcare Others TotalHealthcare is likely tobe the next growthdriver for the IToutsourcing industryA few providersrecognize segmentssuch as publichealthcare revenueunder “public sector”1 Banking, financial services, and insurance2 Consumer packaged goodsSource: Everest Group (2013)
  • 6. Proprietary & Confidential. © 2013, Everest Global, Inc. 6The last three years have witnessed broad-based decline intransactions across regions and verticals, except inhealthcareNorth America1UKOutsourcing deals announcedNumber of transactionsRest of EuropeRest of World2733 710 623283 373302522 475473440 3823172010 2011 20121,978 1,94031,7153 BFSI MDRPublicsector Healthcare Others2012 performance compared to 20111 Excludes Mexico2 Includes Asia-Pacific, Latin America, and Africa3 Includes deal data shared by service providersSource: Everest Group (2013)
  • 7. Proprietary & Confidential. © 2013, Everest Global, Inc. 7Going forward, what trend in volumes do you expectto see in outsourcing activity in the healthcare ITindustry?0%7%7%49%38%Significant decreaseSlight decreaseNo changeSlight increaseSignificant increaseSource: Live polling conducted during the “The Changing Face of IT Outsourcing in the Healthcare Payer Market” webinar on June 5, 2013
  • 8. Proprietary & Confidential. © 2013, Everest Global, Inc. 8Presentation topicsChanging faceof ITO in thepayer industryAre serviceprovidersprepared toboard thissailing ship?Current stateof ITO in thehealthcareindustry Industry drivers Technologyimplications Technologyadoption phasesWrap up andQ&A
  • 9. Proprietary & Confidential. © 2013, Everest Global, Inc. 9PayersStrategyOperations TechnologyGovernment• Medicare• Medicaid• Both Groups• Small groups• Large employersIndividualThe U.S. payer industry is at a critical juncture in history asexternal and internal forces are creating significant impactacross the value chainSource: Everest Group (2013) M&A and consolidation New channels (HIX) Organizational design / talent planning Product development/diversification Customer experience management Healthcare mobility Healthcare analytics Infrastructure modernization Privacy and security Enterprise systems Commercial operations Provider network/data management Ecosystem health care mgmt Compliance and risk management Vendor portfolio management Consolidation
  • 10. Proprietary & Confidential. © 2013, Everest Global, Inc. 103. ClaimstransformationFive forcesdriving healthinsuranceWhile five key forces are driving investments and technologypriorities of the payer industry currently…Shift from the traditional B2B modelto B2C model necessitatinginvestments in areas, such asmobility, customer portals, socialmedia, and analytics to attract,retain, and grow membersCompliance requirements (e.g.,HIPAA 5010, ICD-10 conversion)and regulatory reform (e.g., systemsintegration for Health InformationExchange) are principal catalysts fortechnology demand for healthinsurersNeed for improvement in claims management to raiseefficiency, reduce costs, prevent fraud, and manage minimumMedical Loss Ratio (MLR) mandatesTechnology investments toenable effective preventionand appropriate care;driving analytics toharness claims data,patient data, clinical data,and R&D data to improvecare qualityPost-merger integration amonghealthcare companiesSource: Everest Group (2013)
  • 11. Proprietary & Confidential. © 2013, Everest Global, Inc. 11…significant tectonic shifts such as payer-providerconvergence, are taking the discourse on payer strategiesbeyond the current mandateAcquireManagePayerProviderPayers acquiringprovidersACOs assumingfinancial risksPayers managingACOsJoint venturesbetween payersand providersBlurring lines between payers and providersSource: Everest Group (2013)
  • 12. Proprietary & Confidential. © 2013, Everest Global, Inc. 12Going forward, payers will need to align their strategic focusalong five specific themes that will be critical to maintainingtheir central position in the U.S. healthcare eco-systemTransfer of risk frompayers to providersConsolidation betweenrisk insurance and caredeliveryPersonalized care andthe growing individualsmarketIncreasinglycompetitive marketsand emerging newsales channelsCoordinationContingency ConsolidationConsumerization CompetitionCentral to the themes is “coordination,” which will require payers to handle the implications of the other four themes whilemanaging other stakeholders in the healthcare industry, that include the federal agencies (government), other payers, providersand the end consumer5Cs of changing payer imperativesStakeholders in theU.S. healthcareeco-systemC Payer imperativesCompetitionContingency1Consolidation2Coordination3Consumerization45Source: Everest Group (2013)
  • 13. Proprietary & Confidential. © 2013, Everest Global, Inc. 13These five themes alter the industry dynamic and createsignificant business and technology implications for payerorganizationsContingency Consolidation Coordination Competition Consumerization Shift of risk from payers to providers and payers acquiring care delivery operations Diversifying operations of payer due to integration of care financing with care delivery operations Managing and collaborating with key stakeholders Increased competition due state-mandated QHPs and health insurance exchanges Personalized care delivery and growing adoption of defined contribution plans by large employers Implementing value-driven changes in sales and product strategy Managing operational integration Organizational design and talent planning Product development and diversification Revamp commercial operations Sales channel optimization Investments into HIX and opportunity cost of remodeling the sales channel structure Healthcare mobility Business-financial analytics Infrastructure modernization Device support services Network services Database servicesThemeBackgroundBusinessimplicationsTechnologyimplicationsNOT EXHAUSTIVESource: Everest Group (2013)
  • 14. Proprietary & Confidential. © 2013, Everest Global, Inc. 14Analysis of the technology implications highlights a number ofpriority services that payers need to increase their focus onHealthcareMobilityBusiness-FinancialAnalyticsInfrastructureModernizationDevice supportservicesNetwork servicesData securityservicesWeb-applicationdevelopmentData access andintegration servicesHIX InfrastructuresupportApplication hostingClaims datamanagement (BigData)Electronic healthrecordsMedical dataaccess, encryptionand reportingSmart analyticsRecovery andreconciliationElectronic healthrecordsInfrastructuretransformationCloud-basedinfrastructureMobile and wirelessaccessibilityNodal infrastructurefor HIXBYOD devicesupportCloud-basedinfrastructureMobile devicessupportEcosystem devicesupportOther devicesupportProvider networkmanagementHIX supportPharmacy benefitmanagementnetworkClaims systemsnetworkEducational systemsupportSmart-tiereddatabases – datamodeling, analyticsBig data storageApplication hostingData warehousingApplication serversDatabase servicesNOT EXHAUSTIVESource: Everest Group (2013)
  • 15. Proprietary & Confidential. © 2013, Everest Global, Inc. 15Success across these priorities requires knowledge of howthe broad technology stacks are expected to evolve over thenext 5 to 10 yearsBoth payers and service providers need to start preparing or investing for the “spurt” phase wherein industry maneuverings will amplify intoa steep demand for the identified technology stacksInfrastructuremodernizationBusiness-financialAnalyticsMobility andDevice supportservicesHealthcare opportunitiesNetworkservicesDatabaseservices20252013Phases and duration of technology adoptionSpurt2016 2019 ConsolidationPrepareYearCumulativesize ofinvestment/opportunityILLUSTRATIVESource: Everest Group (2013)
  • 16. Proprietary & Confidential. © 2013, Everest Global, Inc. 16Implications for payersConsumer driven interfaces, systems, and products will drive both the groupand individual segment businessCreate a robust strategy that aligns IT with the needs of an operating modelthat will have merged elements of both care financing and care deliveryDespite the focus on the current reform agenda, payers need to plan for thebusiness and technology implications of the new normal in healthcarePrioritize investments across technology focus areas and identify partnersthat can assist with the technology adoption road mapPayers need to take the lead in building a technology-driven healthcareecosystem
  • 17. Proprietary & Confidential. © 2013, Everest Global, Inc. 17Do you agree when it is said that the healthcare ITindustry is at the same cusp of opportunity as BFSIwas in the late 90s?59%5%36%YesNoCan’t say / Unfair to compareSource: Live polling conducted during the “The Changing Face of IT Outsourcing in the Healthcare Payer Market” webinar on June 5, 2013
  • 18. Proprietary & Confidential. © 2013, Everest Global, Inc. 18Presentation topicsChanging faceof ITO in thepayer industryAre serviceprovidersprepared toboard thissailing ship?Current stateof ITO in thehealthcareindustry Everest GroupPEAK matrixevaluations Need for balancedportfolio of offeringsWrap up andQ&A
  • 19. Proprietary & Confidential. © 2013, Everest Global, Inc. 19Service providers assessed on 2012 PEAK MatrixAssessment based on: RFIs submitted by service providers1 Everest Group Transactions Intelligence database Service provider disclosures and interviews Everest Group’s interaction with healthcare payerbuyersCriteria for inclusion in theassessment Success in large payer AOrelationships, i.e.,– >US$25 million TCV– >3 years relationshipduration– Active as of December31, 2011 Everest Group’sexperience and RFIresponse1 Assessment for Accenture and IBM GS is based on Everest Group’s proprietary Transaction Intelligence (TI) database, service providers’ disclosures, andEverest Group’s interactions with healthcare payer buyersSource: Everest Group (2012)Service provider outreach (partial list)Each year, Everest Group evaluates the capabilities ofservice providers in the payer and provider ITO space
  • 20. Proprietary & Confidential. © 2013, Everest Global, Inc. 20Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix for payer AOEverest Group PEAK MatrixHealthcare Payer Applications OutsourcingLow HighDelivery capability(Scale, scope, domain investments, and delivery footprint)MphasiSInfosysTCSDell ServicesIBM GSAccentureCognizantLeadersMajor ContendersCGIEmerging PlayersLeaderMajor ContenderEmerging PlayerMarketsuccessHighLowSource: Everest Group (2012)
  • 21. Proprietary & Confidential. © 2013, Everest Global, Inc. 21Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix for large provider AO relationships11 PEAK Matrix specific to large (>US$25 million TCV), multi-year (>three years) application outsourcing relationships within the healthcare provider sectorSource: Everest Group (2012)Major ContenderEmerging PlayerLeaderHighLowLow HighDelivery capability(Scale, scope, domain investments, and delivery footprint)LeadersMajor ContendersEmerging PlayersMarketsuccess(Transactionactivity)Mahindra SatyamDell ServicesCSCAccentureHP ESCGICognizantIBMEverest Group PEAK MatrixHealthcare Provider Applications Outsourcing
  • 22. Proprietary & Confidential. © 2013, Everest Global, Inc. 22In the healthcare market, it is becoming important for serviceproviders to have capabilities across the payer providercontinuumService provider Healthcare payers Healthcare providersAccenture Leader LeaderCGI Major Contender Major ContenderCognizant Leader Major ContenderDell Services Major Contender LeaderIBM Leader Major ContenderIntegrated delivery capability for Applications Outsourcing among Payers and Providers The growing trend towards payer provider convergence has made it near mandatory forservice providers to develop capabilities that are strong across both sub-segments However, observing the payer and provider PEAK Matrix evaluations in conjunction throwsup very few choices that are strong across the healthcare eco-systemSource: Everest Group (2013)
  • 23. Proprietary & Confidential. © 2013, Everest Global, Inc. 23Implications for service providersPrepare for heightened competitive intensity given healthcare’s focus as one ofthe highest priority segments for growth among all major service providersInvest in building a broad spectrum of integrated capabilities across the payer-provider IT services continuumRefine the go-to-market strategy (across sales, solutioning, and delivery) toalign with the new technology demand profile in healthcare IT servicesPure-play and niche healthcare service providers will have to converge eitherthrough vertical integration, acquisitions or strategic partnerships
  • 24. Proprietary & Confidential. © 2013, Everest Global, Inc. 24Given the significant changes taking place in theindustry, what is the most important criteria that willdefine success for service providers?29%6%6%58%Broad-based expertise across the healthcare eco-systemStrong experience and success in payer IT industryGlobal delivery capabilities (incl. offshoring)Market leading healthcare platforms & solutionsSource: Live polling conducted during the “The Changing Face of IT Outsourcing in the Healthcare Payer Market” webinar on June 5, 2013
  • 25. Proprietary & Confidential. © 2013, Everest Global, Inc. 25Presentation topicsChanging faceof ITO in thepayer industryAre serviceprovidersprepared toboard thissailing ship?Current stateof ITO in thehealthcareindustryWrap up andQ&A Submit anyremaining questions
  • 26. Proprietary & Confidential. © 2013, Everest Global, Inc. 26To ask a question during the Q&A session Click the question mark (Q&A) button located on right side of your screen. This opens Q&A Be sure to keep the default set to “send to All Panelists” Type your question in the box at the bottom of the Q&A box and click the send button Attendees will receive an email with instructions for downloading today’s presentation For advice or research on healthcare ITO, please contact:– Jimit Arora, jimit.arora@everestgrp.com– Abhishek Singh, abhishek.singh@everestgrp.comQ&AWebsiteswww.everestgrp.comresearch.everestgrp.comTwitter@EverestGroup@Everest_CloudBlogswww.sherpasinblueshirts.comwww.gainingaltitudeinthecloud.comStay connected
  • 27. Proprietary & Confidential. © 2013, Everest Global, Inc. 27Check out our blog for the latest perspectiveson global serviceswww.sherpasinblueshirts.comExperts in the globalservices terrain
  • 28. Proprietary & Confidential. © 2013, Everest Global, Inc. 28Related Content Viewpoint: Outsourcing Implications of Healthcare Payer-Provider Convergence IT Application Outsourcing (AO) in the Healthcare Provider Industry - Service Provider Landscape Application Outsourcing (AO) in the Healthcare Provider Industry - Is IT the Cure? - Annual Report2012 IT Application Outsourcing (AO) in the Life Sciences Industry - Service Provider Landscape IT Application Outsourcing (AO) in the Life Sciences Industry - Annual Report 2012 IT Application Outsourcing (AO) in the Healthcare Payer Industry - Service Provider Landscape IT Application Outsourcing (AO) in the Healthcare Payer Industry - Annual Report 2012 Report Card for the Indian IT Majors - Pecking Order Analysis of the "WITCH" Group Outsourcing and Offshoring Trends in Pharmaceuticals
  • 29. Proprietary & Confidential. © 2013, Everest Global, Inc. 29Everest GroupLeading clients from insight to actionEverest Group is an advisor to business leaders on the next generation of global services with a worldwide reputation for helpingGlobal 1000 firms dramatically improve their performance by optimizing their back- and middle-office business services. With afact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use anddelivery of global services in their pursuits to balance short-term needs with long-term goals. Through its practical consulting,original research, and industry resource services, Everest Group helps clients maximize value from delivery strategies, talent andsourcing models, technologies, and management approaches. Established in 1991, Everest Group serves users of globalservices, providers of services, country organizations, and private equity firms in six continents across all industry categories. Formore information, please visit www.everestgrp.com and research.everestgrp.com.Dallas (Corporate Headquarters)info@everestgrp.com+1-214-451-3000New Yorkinfo@everestgrp.com+1-646-805-4000Torontocanada@everestgrp.com+1-416-865-2033Londonunitedkingdom@everestgrp.com+44-207-887-1483India / Middle Eastindia@everestgrp.com+91-124-496-1000Stay connectedBlogswww.sherpasinblueshirts.comwww.gainingaltitudeinthecloud.comWebsiteswww.everestgrp.comresearch.everestgrp.comTwitter@EverestGroup@Everest_Cloud

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